Sphere 3D Corporation.: Exhibit 10.2 - Filed by newsfilecorp.com






CONVERSION AND ROYALTY
AGREEMENT 

THIS
CONVERSION AND ROYALTY
AGREEMENT (“Agreement”) is entered into
as of November 13, 2018 by and between SILICON VALLEY
TECHNOLOGY PARTNERS,
INC., a Delaware corporation (the
“Company”), the investor set forth on the signature pages below
(the “A-1 Investor”) and, for the purposes of sections 1 and 4
only, SPHERE 3D CORP. a corporation incorporated under the laws of the
Province of Ontario (“Sphere”). Capitalized terms used but not
defined herein have the meanings given to them in the Debenture (as defined
below). 

RECITALS 

A.     
Sphere entered into a Senior Secured Convertible Debenture dated as of
December 1, 2014 (as amended from time to time prior to the date hereof, the
“Debenture”) with the A-1 Investor with an aggregate principal and
interest balance equal to $24,500,000. 

B.     
The Company is assuming the obligations and liabilities of Sphere with
regard to $18,000,000 of the Debenture (the “Assumption” and the
“Assumed Debt”)).

C.     
The Company and the A-1 Investor, in consideration for the Assumption,
have agreed to (i) convert $13,500,000 of the Debenture (the “Newco
Converted A-1 Debt”) into 135 shares of Series A-1 Preferred Stock, (ii)
convert $1,500,000 of the Debenture into 2,120,331 shares of Series A Preferred
Stock (together with the Newco Converted A-1 Debt, the “Newco Converted
Debt”, and such conversion the “Newco Conversion”) and
(iii) notwithstanding any terms of the Debenture to the contrary, the remaining
$3,000,000 of the Debenture outstanding following the Newco Conversion (the
“Remaining Debenture Principal”) will be repaid by the Company
paying the A-1 Investor up to $3,000,000 based on the sale of products and
services in accordance with the terms of Section 3 below.

AGREEMENT 

NOW
THEREFORE, in consideration of the foregoing and for mutual
and valid consideration the receipt and sufficiency of which are hereby
acknowledged, the Company, the A-1 Investor and, in respect of Sections 1 and 4
only, Sphere, intending to be legally bound, agree as follows: 

1.     
ASSUMPTION 

1.1     
Effective upon the execution of this Agreement and for an agreed
consideration, the Company hereby assumes from Sphere Sphere’s interest in, and
contractual rights and obligations under, the Debenture in its capacity as the
Corporation to the extent related to the amount of $18,000,000 arising under the
Debenture.




1.2     
Effective upon the execution of this Agreement, Sphere, Sphere 3D, Inc., and
V3 Systems Holdings, Inc. (collectively, the “Sphere Parties”) are
hereby automatically released as obligors and guarantors under the Debenture and
the Collateral Documents (as defined in the Debenture) and any liens or security
interests granted by the Sphere Parties with respect to the Debenture shall
automatically terminate and be released. Sphere and its designees shall be
authorized, at the sole expense of Sphere, to file releases and termination
statements of all personal property financing statements and other security
interest recordations filed in favor of FBC with respect to the Debenture. Upon
Sphere’s reasonable request from time to time, FBC shall execute and deliver
such additional lien releases as may be necessary to effectively terminate any
and all liens on and security interests in any collateral that was pledged by
Sphere or any of its subsidiaries to secure the Assumed Debt; provided, however,
that any and all such additional lien releases shall be prepared by Sphere,
reviewed and approved by FBC (such approval not to be unreasonably withheld,
delayed or conditioned), and recorded by Sphere, all at Sphere’s sole cost and
expense. 

1.3     
The Company does not assume any liability or potential liability which
Sphere may have in respect of any fraudulent acts or willful breach in
connection with Sphere and/or certain former affiliates of Sphere granting
certain security in favor of Opus Bank in November 2017.

2.     
CONVERSION OF DEBT 

2.1     
Effective upon the execution of this Agreement the Newco Converted Debt will
automatically convert into (a) 135 shares of Series A-1 Preferred Stock of the
Company and (b) 2,120,331 shares of Series A Preferred Stock of the Company.


2.2     
Immediately following the Newco Conversion, the A-1 Investor agrees and
acknowledges that all outstanding indebtedness (including, without limitation,
for principal, interest and fees or any prepayment penalty payments due in
connection with the Newco Conversion) and other obligations of the Company under
or relating to the Debenture, other than in respect of the Remaining Debenture
Principal, automatically shall be deemed paid and satisfied in full and all
obligations and liabilities of the Guarantors (as defined in the Debenture)
under the Debenture shall be irrevocably discharged, terminated and released.


2.3     
Notwithstanding any provision in this Agreement to the contrary, nothing in
this Agreement shall waive or be construed to waive any claim or potential claim
which the A-1 Investor may have against the Guarantors (as defined in the
Debenture) (which, for the avoidance of doubt, shall not include Sphere, Sphere
3D, Inc., or V3 Systems Holdings, Inc., all of whom have been released from
their contractual obligations under the Debenture) in respect of any fraudulent
acts or willful breach in connection with Sphere and/or certain former
affiliates of Sphere granting certain security in favor of Opus Bank in November
2017. 

2.




2.4     
Immediately following the Newco Conversion any liens or security interest
granted with respect to the Assumed Debt, shall automatically terminate and be
released. The A-1 Investor agrees and acknowledges that the Remaining Debenture
Principal shall remain outstanding on an unsecured basis. The Company and its
designees shall be authorized, at the sole expense of the Company, to file
releases and termination statements of all personal property financing
statements filed in favor of the A-1 Investor with respect to the Assumed Debt.
Upon the Company’s reasonable request from time to time, the A-1 Investor shall
execute and deliver such additional lien releases as may be necessary to
effectively terminate any and all liens on and security interests in any
collateral that was pledged by any Guarantor (as defined in the Debenture) to
secure the Assumed Debt; provided, however, that any and all such additional
lien releases shall be prepared by the Company, reviewed and approved by the A-1
Investor, and recorded by the Company, all at the Company’s sole cost and
expense.

3.      ROYALTY


3.1     
Notwithstanding any provision in the Debenture to the contrary, the
Company will repay the Remaining Debenture Principal based on the sale, lease,
license, loan, rental, test or evaluation of RDX Products calculated in
accordance with the formula of Exhibit A (the amount of each such payment being
a “Royalty Repayment”). All Royalty Repayments
arising pursuant to this Section 3.1 will be paid within thirty (30) days of the
end of each calendar month for which such Royalty Repayments have accrued and
shall be applied by the A-1 Investor to repay the Remaining Debenture Principal.
The Company agrees to keep accurate books and records regarding its sale of RDX
Products and its calculation of Royalty Repayments due hereunder. No more than
once per calendar year, the A-1 Investor or its designee may audit such books
and records at the Company’s premises during normal business hours. If any such
audit reveals an under-payment by the Company, the Company will promptly remit
to the A-1 Investor the amount of such shortfall and reimburse the A-1 Investor
for the actual out of pocket cost of the audit. Upon the Company’s remittance to
the A-1 Investor of Royalty Repayments totaling $3,000,000, the Company will
have no additional obligation to pay any Royalty Repayments pursuant to this
Section 3.1 and the A-1 Investor agrees and acknowledges that (i) all
outstanding indebtedness and other obligations of the Company under or relating
to the Debenture automatically shall be deemed paid and satisfied in full and,
in accordance with Section 9.4 (Discharge) of the Debenture, all
obligations and liabilities of the Company under the Debenture shall be
irrevocably discharged. As used herein, “RDX Products” means RDX®
media cartridges, which are durable, portable and removable storage devices.

3.2     
The A-1 Investor agrees and acknowledges that from the date of this
Agreement all of the representations, undertakings and events of default set out
in the Debenture shall have no further force or effect.

3.




4.     
MISCELLANEOUS PROVISIONS 

4.1     
Waiver. Upon effectiveness of the Conversion, no party will have, and
the A-1 Investor and the Company each hereby waive, any claims, demands, debts,
accounts, liabilities, contentions or causes of action of any kind, nature,
character and description whatsoever, fixed or contingent or otherwise, to
monies or rights of any kind whatsoever against the other party in respect of
the rights or obligations set forth in the Debenture, including, but not limited
to, payments of principal, interest or any other payment of any kind, options to
acquire shares of the Company or to convert any part of the Debenture or any
other amount into shares of the Company and/or any other rights as the parties
had, have, or may have under the Debenture resulting from any matter, event,
default, breach, state of facts, claim, contention or cause whatsoever,
occurring or existing from the beginning of time to the effectiveness of the
Conversion, in connection with or relating to the Debenture. 

4.2     
Governing Law. THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH,
AND GOVERNED IN ALL RESPECTS BY, THE LAWS OF THE STATE OF DELAWARE (WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW). 

4.3     
Notices. All notices and other communications under this Agreement
will be in writing and will be deemed to have been duly given and duly delivered
when received by the intended recipient at the applicable address or e-mail
address on file with the Company. 

4.4     
Severability. In the event that any provision of this Agreement, or
the application of such provision to any person or set of circumstances, will be
determined to be invalid, unlawful, void or unenforceable to any extent, the
remainder of this Agreement, and the application of such provision to persons or
circumstances other than those as to which it is determined to be invalid,
unlawful, void or unenforceable, will not be affected and will continue to be
valid and enforceable to the fullest extent permitted by law. 

4.5     
Entire Agreement. This Agreement, the Debenture, and the documents
contemplated thereby set forth the entire understanding of the Company and the
A-1 Investor and supersedes all other agreements and understandings between the
Company and the A-1 Investor relating to the subject matter of this Agreement.


4.6     
Amendments. This Agreement may not be amended, modified, altered or
supplemented except by means of a written instrument executed on behalf of both
(i) the Company, (ii) the A-1 Investor and (iii) with respect to Sections 1 and
4 only, Sphere. 

4.




4.7     
Counterparts; Facsimile. This Agreement may be executed in any number
of counterparts, each of which will be deemed to be an original, and all of
which together will constitute one and the same document. This Agreement may be
executed by facsimile, PDF or other electronic signatures. 

[SIGNATURE PAGES
FOLLOW] 

5.




The undersigned have executed
this CONVERSION AND ROYALTY
AGREEMENT as of the date first above written.

	 	
      SILICON VALLEY
      TECHNOLOGY PARTNERS,
      INC. 

	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	By:	 
	 	 	Eric Kelly 
	 	 	 
	 	 	Chief Executive Officer







The undersigned have executed
this CONVERSION AND ROYALTY
AGREEMENT as of the date first above written.

	 	A-1 INVESTOR: 
	 	 
	 	FBC HOLDINGS S.Á R.L. 
	 	 
	 	By: /s/ Trustmoore Luxembourg S.A.

	 	 
	 	Name: Trustmoore Luxembourg S.A. 
	 	 
	 	Title: Manager A 
	 	 
	 	By: /s/ Cyrus Capital Partners, LP.
  
	 	 
	 	Name: Cyrus Capital Partners, LP 
	 	 
	 	Title: Manager B 






The undersigned have executed
this CONVERSION AND ROYALTY
AGREEMENT as of the date first above written.

	 	SPHERE 3D CORP. 
	 	 
	 	 	  
	 	By:	 /s/ Peter Tassiopoulous 
	 	 	 
	 	 	Name: Peter Tassiopoulos 
	 	 	Title: President 








	 Exhibit
      A 	 
	 	 
	 RDX 	 
	 	 
	Capacity 	 	Royalty
    	 
	 	 	 	 
	0 to 1TB 	$	 1.00 	 
	 	 	 	 
	2TB 	$	 1.50 	 
	 	 	 	 
	3TB 	$	 2.00 	 
	 	 	 	 
	4TB 	$	 2.50 	 
	 	 	 	 
	5TB 	$	 3.00 	 
	 	 	 	 
	6TB 	$	 3.50 	 
	 	 	 	 
	Max 	$	 4.00